March 30 (Bloomberg) -- Business activity in the U.S. held near a 10-month high in March, showing the economy is weathering rising fuel costs.
The Institute for Supply Management-Chicago Inc. said today its barometer fell to 62.2 from 64 in February. Readings greater than 50 signal growth. Economists forecast the gauge would fall to 63, according to the median of 58 estimates in a Bloomberg News survey.
The strongest auto sales since 2008 combined with growing business investment in new equipment may keep propelling demand throughout all manufacturing industries, which account for about 12 percent of the economy. Increasing sales will probably also continue to underpin hiring, extending the biggest payroll gains since 2006.
“Output and hiring should remain robust,” Joel Naroff, president of Naroff Economic Advisors Inc. in Holland, Pennsylvania, said before the report. “Manufacturing has been strong, with order books continuing to fill.”
Economists’ projections in the Bloomberg survey ranged from 59.7 to 67.
Consumer spending in the U.S. rose in February by the most in seven months, a Commerce Department report showed today, signaling the biggest part of the economy is strengthening.
Purchases climbed 0.8 percent, the largest gain since July. The median estimate of economists surveyed by Bloomberg News called for a 0.6 percent increase. Incomes advanced less than projected, sending the saving rate to a more than two-year low.
Stocks rose, extending the Standard & Poor’s 500 Index’s biggest first-quarter advance since 1998.
The S&P 500 increased 0.3 percent to 1,406.72 at 10:11 a.m. New York time. The benchmark gauge has rallied 12 percent since the beginning of 2012, gaining for a second straight quarter.
The Chicago group’s employment measure slid to 56.3 from 64.2 the prior month. The production gauge increased to 68.6, the highest since last April, from 67.8, and the index of new orders decreased to 63.3 from 69.2.
The measure of prices paid climbed to 70.1 from 65.6, and a gauge of inventories rose to 57.4 from 49.6.
Economists watch the Chicago index and other regional manufacturing reports for an early reading on the national outlook. The Chicago group says its membership includes both manufacturers and service providers with operations in the U.S. and abroad, making the gauge a measure of overall growth.
The ISM’s national factory index probably rose to 53.1 in March from 52.4 the prior month, according to the median projection in a Bloomberg survey ahead of the group’s report April 2. As in the Chicago survey, a reading greater than 50 signals expansion.
Other regional measures have been mixed this month. Data from the Federal Reserve Banks of Philadelphia and New York showed manufacturing expanded at a faster pace in March. Similar gauges from Dallas and Richmond pointed to a slowdown.
Nike Inc., the world’s largest sporting-goods company, is among companies seeing improving demand.
The Beaverton, Oregon-based company this month reported third-quarter profit that topped analysts’ estimates as sales gained in North America. The maker of Air Jordan basketball shoes has been using new products to lure consumers who are spending more on athletic gear across the industry. The strategy helped boost Nike’s third-quarter sales 17 percent to $2.15 billion in North America, the company’s largest market.
“There is some stability easing back into the broader marketplace as consumer confidence moves higher in some parts of the world,” Nike Chief Executive Officer Mark G. Parker said in a March 22 conference call.
That may explain why factories are hiring. Manufacturing payrolls climbed by 83,000 workers in the first two months of 2012, the best performance over a similar period in a year, according to data from the Labor Department.
Vehicle demand should also drive production at the nation’s auto plants. Cars and light trucks sold at a 15 million annual rate last month, the most since 2008, according to Ward’s Automotive Group.
Growing demand shows that higher fuel costs have yet to damage consumer spending, which accounts for about 70 percent of the economy. The price of a gallon of regular unleaded gasoline climbed to a 10-month high of $3.93 on March 29, according to AAA, the nation’s largest automobile association.
The Bloomberg Consumer Comfort Index last week held close to a four-year high, a report yesterday showed.
To contact the reporter on this story: Carlos Torres in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Christopher Wellisz at email@example.com.